Unit sales Sales price Variable cost per unit Fixed operating costs except depreciation Accelerated depreciation rate Year 1 3,500 $38.50 $22.34 $37,000 33% O $46,463 O $55,756 O $53,432 O $37,170 Year 2 4,000 $39.88 $22.85 $23.67 $37,500 $38,120 45% 15% Year 3 4,200 $40.15 Year 4 4,250 $41.55 $23.87 $39,560 7% This project will require an investment of $10,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. McFann pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be when using accelerated depreciation. Determine what the project's net present value (NPV) would be when using accelerated depreciation. (Note: Round your intermediate calculations to the nearest whole number.)
Unit sales Sales price Variable cost per unit Fixed operating costs except depreciation Accelerated depreciation rate Year 1 3,500 $38.50 $22.34 $37,000 33% O $46,463 O $55,756 O $53,432 O $37,170 Year 2 4,000 $39.88 $22.85 $23.67 $37,500 $38,120 45% 15% Year 3 4,200 $40.15 Year 4 4,250 $41.55 $23.87 $39,560 7% This project will require an investment of $10,000 in new equipment. The equipment will have no salvage value at the end of the project's four-year life. McFann pays a constant tax rate of 40%, and it has a weighted average cost of capital (WACC) of 11%. Determine what the project's net present value (NPV) would be when using accelerated depreciation. Determine what the project's net present value (NPV) would be when using accelerated depreciation. (Note: Round your intermediate calculations to the nearest whole number.)
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter12: Capital Investment Analysis
Section: Chapter Questions
Problem 4PA: Net present value method, internal rate of return method, and analysis for a service company The...
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